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Memo to Microsoft: Enough with the SKUed Windows

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When it comes to Windows 7, Microsoft should resist the usual inner demons.

A new client operating system from Microsoft is the gift that keeps giving. You don't get just one version. You get lots of different versions. There currently exist five editions - or SKUs - of Windows Vista, while its predecessor Windows XP came in six (never mind the additional two created following a European Union antitrust ruling on Windows Media Player).

If there was a genuine or substantial difference between versions based on user needs or markets, you could understand this. But so often, there isn't, and it's simply an attempt to up-sell what Microsoft must assume are a bunch of rubes short on nous and long on cash.

Take the Windows Vista SKUs. They start with the suboptimal Home Basic and range up to the fully stacked Windows Vista Ultimate. Windows Vista Home Basic has just three of the 13 so-called "features" offered by Windows Vista Ultimate.

Those features: "most secure Windows ever," "quickly find what you need," and "easier networking connectivity". All for the knockdown price of $199. It doesn't even have the Aero interface of the others, a fact that has landed Microsoft in legal hot water with customers who feel cheated.

Compare Windows Vista to Apple's OS X that comes in just one flavor, has application and infrastructure features that could be considered both basic and advanced, and carries the all-in price of $129 for a single user.

Microsoft's SKU strategy is simply designed to bring in the dollars and please Wall Street. It's like airlines that rely on high-paying business-class travelers to fund the cost of running planes packed full of low-paying economy class travelers.

On each quarterly financial call with Wall Street, Microsoft breaks out its mix of "premium" Windows sales, and that figure is usually in the 70 per cent range. "Premium" in the Windows Vista family is Windows Vista Business, Windows Vista Home Premium, Windows Vista Ultimate, and Windows Vista Enterprise. Most regular people don't get to see this latter edition as it's only available under Microsoft's volume licensing program.

During the recent second quarter, though, the wheels fell off Microsoft's plan and sales of all premium editions to PC manufacturers fell 11 points to 64 per cent, as sales of the PCs capable of running them crashed. Sales of cheap copies of Windows XP were up, largely thanks to growing sales of the low-spec netbooks that run them.

And therein lies the problem.

The smart choice: opportunity from uncertainty

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